Massachusetts Lottery Broken

wiredog sends in a story about how knowledge of lottery rules and statistics has allowed opportunistic players in Massachusetts to spend hundreds of thousands of dollars on tickets while being assured of a massive payoff. Quoting: "Because of a quirk in the rules, when the jackpot reaches roughly $2 million and no one wins, payoffs for smaller prizes swell dramatically, which statisticians say practically assures a profit to anyone who buys at least $100,000 worth of tickets. During these brief periods — 'rolldown weeks' in gambling parlance — a tiny group of savvy bettors, among them highly trained computer scientists from MIT and Northeastern University, virtually take over the game. ... Srivastava calculated that a gambler who bought 200,000 Cash WinFall tickets during four rolldown weeks in a year would win enough to cover the $1.6 million investment and earn a profit of $240,000 to $1.4 million — without ever winning the jackpot."

Comments

Oh I see

[JoshuaZ]

I see now. So as long as people have bad ideas about statistics it is ok. Believing some numbers are lucky is ok. Ignorant people saying things like "I haven't won and I've been playing for years, I have to win soon" is ok. Having people believe that God told them to buy a lottery ticket is ok. But when one someone actually has a chance to be correct about having a chance to win and make a profit then it isn't ok. Why don't the governments stop pretending. The lottery is intended on a tax for those who can't do math. And most of those people can't do math because the government schools failed to teach them. The government wants to use a lottery so it can get extra money from poor, uneducated people while pretending to have a progressive tax system which doesn't hurt the poor.

Re:Oh I see

[rubycodez]

that is false, plenty of people understand the math perfectly but play anyway. You don't understand the nature of three-quarters the people you meet (that's about the fraction of people who gamble at every place I've ever worked, and we're talking college educated people of median income of $85K currently)

Re:Oh I see

[Lemmy Caution]

Lotteries are played by most people as entertainment, not as investments.

Re:Oh I see

[MBGMorden]

Indeed. I've failed to see the "tax on the people who are bad at math" argument. Yes, the odds of winning are astronomically high. They are however, non-zero, and someone DOES eventually cash out on the jackpots. Deciding to take a gamble isn't stupid so long as you know and accept the odds.

If you go obsessive over it (ie, dumping loads of money into the lottery as a financial "plan"), then sure, but myself for example - my state has had the lottery for about 10 years now. In those 10 years, I've bought about 8 or so lottery tickets. So I'm spending less than a dollar per year on average. Still haven't won, and don't think I realistically ever will, but it's not too much of a financial burden to gamble away at a long shot (yes, a really, really LONG shot).

Basically, I go by the advice my dad taught me while playing cards - expect that you're going to lose every bet you ever make. If you're not ok with that outcome, then don't make the bet in the first place.

Bingo!

[Gription]

The point of the lottery is simply to make money for the state. There isn't any reason that it must be impossible to make money off of it unless that keeps the state from making money on it.

Winnings taxable?

[jayveekay]

"A lottery agent who sells tickets to the group said Tong’s Fortunelot invested $200,000 at his store in May and won $280,000."

The $200,000 investment would presumably be after tax money. The 280,000 dollars in winnings would be taxable. At the Bush Tax Cut marginal rate of 35% that would leave 182,000, for a net loss of $18,000. Presumably the bettors must also be finding a way to game the tax system as well.